competitive behaviour by the firms, often ends up protecting firms from
the forces of competition.
Deregulation and Privatization
With this growing skepticism about the value of regulation, in the 1980s
many industrialized economies began to reduce the level of government
control over industry. This was especially true in the United States under
President Ronald Reagan and in the United Kingdom under Prime
Minister Margaret Thatcher. But it also occurred in many other countries,
including Canada. Various experiences were pushing in this direction:
The realization that the actions of regulatory bodies often reduced,
rather than increased, competition;
The dashing of the hopes that publicly owned firms would work
better than privately owned firms in the areas of efficiency,
productivity growth, and industrial relations; and
The awareness that falling costs for transportation, communications,
and data processing exposed local industries to much more
widespread international competition than they had previously
experienced domestically.Two policy responses ensued. The first was deregulation—intended to
leave prices and entry to be determined by private decisions. The second
was privatization of publicly owned firms.